May 18, 2011

Out with the Military, in with the Contractors

New, Familiar Challenges for State Dept. in Iraq

By JAKE WIENS

NPR reported yesterday on the challenges the State Department will face in Iraq following the scheduled pullout of the U.S. military at the end of this year.

In order to fill the void created by the departure of the military, State will rely heavily on the use of private security contractors. The Department estimates that it will more than double the number of private security contractors currently operating in Iraq.

Major questions loom about whether State can effectively oversee this influx of contractors. POGO previously touched on this issue in a November 2010 letter urging President Obama to nominate a permanent State Department Inspector General (IG), which has been operating under an acting IG for over three years:

The U.S. military plans to pull out entirely from Iraq by December 31, 2011. “After the departure of U.S. Forces [from Iraq], [State] will continue to have a critical need for logistical and life support of a magnitude and scale of complexity that is unprecedented” in State’s history, according to State’s Under Secretary for Management, Patrick F. Kennedy. In order to meet this challenge, State plans to utilize “between 6,000 and 7,000 security contractors,” more than double its current numbers. Yet, Kennedy himself has said State “does not have within its Foreign Service cadre sufficient experience and expertise to perform necessary contract oversight.” The Commission on Wartime Contracting (CWC) has gone even further, noting that, “With such a large increase in contract employees, existing weaknesses in contract management and oversight, not to mention funding and hiring challenges, can only grow more troublesome.”

Given these coming challenges, the importance of independent and aggressive oversight of State and its contractors in Iraq will be paramount. POGO is convinced that under its current leadership, State’s OIG will not be up to the task.

The examples of State struggling to oversee its current cadre of private security contractors are as numerous as they are notorious. One example POGO knows all too well involved the “Lord of the Flies environment” created by contractors working for Armor Group North America at the U.S. Embassy in Kabul, Afghanistan. Another example involved the shooting of 17 Iraqi civilians by contractors working for the company formerly known as Blackwater. And the list goes on.

Given this history, it is not surprising that POGO has not been alone in calling on the Obama administration to nominate a permanent Inspector General to provide independent oversight of State. At a recent House Committee on Foreign Affairs hearing, even the current de facto State Inspector General said that it was time for State’s IG Office to be led by a permanent, presidentially appointed Inspector General.

So why has the IG position been vacant for so long? According to a recent story in The Washington Post, some officials may prefer to keep the acting IG at the helm:

One high-ranking official familiar with the selection process said the State Department’s current leadership had opposed filling the top slot because it prefers the office to remain under Geisel’s supervision. A committee of existing inspectors general long ago put forward a short list of recommendations for the job, but the White House has not acted on them, the official said, asking not to be identified because of the sensitivity of the issue.

But regardless of the reason for the prolonged vacancy, considering the coming challenges facing State, it is now more urgent than ever that Obama nominate an independent and aggressive permanent Inspector General to oversee the State Department.

Comments

Agree with both.

LPTAO creates a race to bottom on price to win and this is fostered by government processes which includes external pressure to secure the lowest price. Trade offs and concessions start getting made on past performance, in particular with an eye toward 8A and other "extra point" free-bees in government contracting, and price, all to save money when, if government reviewers treated their budget as if it was their own money, vastly lower prices and an absence of past performance with good reviews should be setting off alarm bells! End of the day, the prevailing attitude is, "If they (the contractor) say they can do it for XYZ dollars, that's their problem and we'll hold them to it". The low bidder gets selected then, lo and behold, falls on their face. Government officials take the high road, display mock suprise and (fairly enough) blame the inept contractor who defaults - then begin the 1 year solicitation process all over again. By then, you'll have a new batch of government folks transfer in and we re-live the whole mess all over in the overseas "learn as we go" mode.

This was rife in the hot days of Iraq and Afghanistan with small start ups low balling bids in order to get their foot in the door, hope and pray things went well and hope to expand and get more business. This is not to say the large outfits naturally do a better job, but I think the trend is self-evident.

You get what you pay for. Buy cheap, buy twice, etc. If we applied a little common sense and technical knowledge, and cared a little bit more about it, this could be avoided. This spec writing and bid assessing is often a second job in the government world and with plates overflowing already, the time and energy is not always put forth and the effort, or lack thereof, is evident in the result. Otherwise, on price, honestly, most of us do a much better job in our personal lives managing our own affairs and would naturally expect to get a poorer product when paying less. It's just a fact of life. This is why we pay more for a name brand, quality product to better our chances it is engineered well, does what it's supposed to, and will last a long time. Buy a cheap product, or a knock off, you are not surprised when it konks out after 6 months. Elementary, common sense and easily applies here.

Doug, "Nice try, but no cigar." As POGO stated in its October 6, 2009 critique of the Commission on Wartime Contracting's recommendation that problems with security guard services at the Kabul Embassy were caused by failure to use the "best value" approach to source selection in lieu of the "lowest-price technically acceptable offer" (LPTAO) approach, that recommendation was nonsense then and it is nonsense now. Like all contractor proponents of best-value, you try to equate best value with better quality and LPTAO with low-price and/or inferior quality. That's a standard industry tag line but not an accurate representation of the law or regulations pertaining to contractor source selection. What you conveniently ignore, are the words "technically acceptable offer" while focusing on the words "lowest-price". Agencies have wide discretion in determining what is technically acceptable, and as our October 6, 2009 analysis pointed out, if the State Department wanted contractors to meet certain minimum technical standards for guard services, they should have so stated in the solicitation. See:

Instead, the State Department screwed up the solicitation and then tried to blame the source selection process rather than their own inept writing of the specifications or statement of work. POGO doesn't necessarily disagree with the concept of "best value" source selection, but we think it has been misrepresented by industry to suggest that it is a superior method of source selection. In fact, it is a less certain, much more subjective method of source selection which is frequently manipulated to obtain the desired vendor or contractor (every offeror thinks its offer represents "best value to the government").

We would refer you to Marshall Doke's seminal article entitled "The Myth of Full and Open Competition" (reprinted in the report of the Acquisition Advisory Panel) for a scholarly discussion of the distinctions between "best-value" and LPTAO source selection methodologies. The article may be found here:

As Sen. Daniel Moynihan famously said, everyone is entitled to their own opinion, but not their own set of facts.

Only in the worldview of a pro private military and security contractor trade association, funded by contractor member companies, can a matter of fact, factual observation that the U.S. State Department Inspector General is currently not up to the job of providing effective oversight over its contractors, a conclusion supported by all objective agencies that have looked into the matter, be twisted into advocacy for best value contracting.

Best value contracting does, in fact, have a useful and legitimate role to play in the debate over contracting. But this post isn't it.

Perhaps Mr. Brooks could try justifying his salary by sticking to the relevant issue.

The Obama administration should move forward the Department of State Inspector General. Improved oversight makes sense and is supported by the industry: good contracting and good oversight always benefits the better companies.

However, on the specific issue of embassy security, in October 2009 the Commission on Wartime Contracting came out with a report that highlighted how 'best value' contracting was essential to good security contracting in contingency operations. See Special Report 2: Lowest-priced security not good enough for war-zone embassies.

While POGO has done some excellent work on domestic peacetime contracting in the past, contracting for stability operations in highly volatile weak and failed states is significantly different and pinching pennies can have enormously detrimental consequences. The CWC is correct to point out that quality and value have critical humanitarian and policy implications in contingency operations.

POGO’s dogmatic support for ‘lowest price, technically acceptable’ form of procurement undermines the ability of U.S. government procurement experts to make thoughtful decisions in the best interest of taxpayers and international policies.